More than 50 people applied to live at the 20 units in Hoblers Bridge Road, despite a lack of advertising.

And upon meeting their new neighbours, many of the successful applicants were delighted to learn they would be living alongside old friends.

The $3 million project, due for completion in December, is the brainchild of the St Michaels Association, a Launceston disability support organisation.

Chief executive John Gilpin said the units, next to the organisation's Newstead headquarters, would incorporate the benefits of an intensive care facility, supported accommodation and independent living.

``When people with disability live independently in the community they sometimes feel that they aren't really accepted and that can lead to depression, isolation and loneliness,''  he said.

``Here, we can offer care and keep people safe, but they also get to live in their own home.''

Mr Gilpin said St Michaels had for the first time ever borrowed money for the project, which will cost $3 million, with the state government contributing $500,000 plus land.

He said tenants had signed a three-year lease and would pay rent, with the federal government helping to supplement rent through the National Rental Affordability Scheme.

Mr Gilpin said the development offered people with disability more choice around where they lived, and important social opportunities.

``When we had our first tenant meeting, we had a lot of people spread across the North to as far as Devonport, and they were all excited because they were recognising people they'd been to special school with,'' he said.

The project is due for completion in December.